This is a bit complicated, way above my head at least, but I'll do my best to explain what I know.

Not default on bonuses but default on these mortgages. A big number of mortgages were repackaged and securitised, sold as Mortgage Baked Securities, and then redistributed to the whole world with promises that houses always go up in value.

As the housing bubble cooled and burst and the income stream slowed down as the cost of these homes were under water but many of them were still receiving partial income coming in from the mortgages in the securities, although, many were at a lesser rate because of people beginning to lose their jobs and such.

When these mortgage companies started going under, countries the world over now have securities that are, according to Mark to Market accounting, worthless.

If it says anything, Mark to Market accounting was championed by Enron.

So, unless the U.S. does something to settle these obligations, our image to the world would be tarnished and maybe even destroyed since the U.S. is the only country in history to never have defaulted on their obligations.

Since the U.S. Government has some of these loans in their possession, when they picked Fannie Mae and Freddie Mac, they are pretty much obligated to the world to resolve this issue.

What sucks is that we had to pay this much for them and that so much of the money used to purchase it is going to individuals that belong in jail but I digress.